Building a Web site? Cost keeps climbing

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The median price for building a marketing-oriented Web site has increased by as much as 78% since October 1997, with costs for putting a small company on the Web jumping the most, according to Business Marketing's latest national survey of Web developers.

Rates for midsize and large marketers have posted more modest median hikes of 20% and 10%, respectively.

The median price nationally for a simple Web site has jumped from $25,000 eight months ago to $44,500 today.

Sophistication grows

More functional, medium-level sites rose in price from $83,000 to $99,750, while the largest sites, which had been dropping in price, reversed that trend and saw prices increase for the first time since the survey began in September 1996.

These price increases might indicate that Web shops are getting a better grasp on the bidding process and giving marketers a better idea of real costs up front.

"Firms are getting smarter about what it really costs to build sites," says Kimberly Andrews, manager of solutions services for Seattle-based FreeRange Media. "They've done enough work that they are taking less of a bath on projects. I think what's hurt so many agencies initially is that they've underbid projects and not been able to renegotiate later."

Small-site costs shoot higher

Marketers and developers alike say that in order to get the best return on an investment of this size, careful planning must be done before the first page gets built. The strategic stages of development cost money and aren't necessarily as scalable as other segments of Web development.

Strategy "has the hardest effect on the prices for smaller projects," Ms. Andrews says. "We wind up doing just as much work for smaller sites as medium-size sites."

This could account for the dramatic, 78% increase in prices for smaller sites while the larger sites rose at a lesser rate.

No more small clients

The larger Web companies, including many of the developers in NetMarketing's Web Price Index, are less likely to even take on small clients nowadays.

"Many more established firms are reluctant to do work for under $50,000," Ms. Andrews said.

Of course, plenty of smaller Web shops have sprung up in every major city to pick up projects from small-business owners and retailers. Additionally, programs such as Microsoft's FrontPage and NetObject's Fusion continue to make it easier for small companies to develop their own sites.

The Association of National Advertisers recently released preliminary results from a survey of its membership regarding online spending. The study found a small decrease in what marketers actually have spent on their own Web sites, falling to an average of $228,000. However, it noted a 30% drop in the cost of maintaining a site once it's up and running.

ANA senior VP Robin Webster attributes this to a maturing industry.

"It comes down to the learning curve," she says. "Been there. Done that. We can do it faster now."

Geographic pricing

She also notes marketers "aren't redesigning their sites as much as a year ago, but refreshing the content more."

The ANA study does not distinguish between costs for marketers who create their sites in-house and costs for those who shop their sites out to Web developers.

Geography continues to be a factor in pricing. Marketers still can expect to pay more for Web sites in cities with well-established interactive communities. Predictably, New York and San Francisco posted significantly higher median prices than the other cities in the survey.

Atlanta and Dallas came in below the median for all three site groups. Dallas once again posted the lowest prices for small sites out of the six cities surveyed.